Credit card companies are constantly looking for ways to get more customers. One way they do this is by offering extremely low interest rates for people who want to move a large balance to the cards. For many people this looks attractive because it is an easy way to get a debt consolidation loan with virtually no fees. While this isnt necessarily a bad strategy, you need to make sure you read the fine print and have a solid plan for what to do once the introductory period is over.
Some credit companies will offer you 0% interest for a year, but after the year the rate jumps to 20%. If you dont understand all of the little details of the loan, you may find yourself worse off than before. Using plastic credit in this way can be a good thing if it helps you get out of debt. However, if the additional credit becomes a temptation and causes you to go deeper into debt than before the low interest loan can do more harm than good.
If you are looking at using a credit card for this, make sure you understand exactly what the terms are. Also make sure you keep a copy of the terms so you have them to backup any dispute you may have. In addition you need to have a plan for what to do if you are unable to pay off the balance by the time the rate goes back up. For example you might want to take out a home equity loan on your house to pay off the balance. Some people may even have the cash available, but would rather earn interest on their money instead of pay off the debt. For those people they can just pay off the balance from their savings (or look for another great credit card deal).
The problem with this type of strategy is the fact that it is very easy to spend money, but difficult to control it. For many people just having a larger line of credit available will be too much of a temptation. If you are able to discipline your spending however, these credit card deals can work to your advantage.
The Debt Consolidation blog offers insights into managing and reducing your debt. You can find this article and more like it at: http://debt-consolidation.strategy-blogs.com.
